If production in the economy is efficient, then changes in market prices
A. Move us to a point above the production possibilities curve.
B. Have no effect on our position on the production possibilities curve.
C. Move us along the edge of the production possibilities curve.
D. Move us from a point below the production possibilities curve to a point on the production possibilities curve.
Answer: C
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A complement is a good
A) of lower quality than another good. B) used in conjunction with another good. C) used instead of another good. D) of higher quality than another good.
Suppose two firms are trying to decide how much to budget for research and development. Once a new discovery is made, each firm benefits regardless of which firm developed the innovation. In this R&D game of chicken, the Nash equilibrium will be that
A) either both firms conduct the R&D or neither firm conducts the R&D. B) only one firm conducts the R&D but which firm conducts the R&D cannot be determined. C) both firms conduct the R&D. D) neither firm conducts the R&D.
Which of the following is a form of outsourcing?
A) changing your own oil B) washing your clothes C) getting your fruits and vegetables from the farmers' market D) studying for your economics exam
For many years the U.S. government imposed quotas on cheap, Middle Eastern oil imports. The U.S. consumer consequently paid $3 billion more per year for oil products. A likely rationale for such a policy is
a. people in the oil industry deserved the transfer. b. conservation. c. one cannot be dependent on foreign supplies of so crucial a resource. d. American oil was of higher quality and deserved a higher price.